Saudi government approves permanent residency system for first time

LONDON - The Saudi government has approved a plan that allows for permanent residency to certain expatriates, permitting them to own real estate in the kingdom and reside in the country with their families without a Saudi sponsor.

The decision, aimed at attracting long-term investment as the government tries to diversify the economy and boost domestic spending, would open the kingdom to “investors and skilled professionals,” Saudi Economy Minister Mohammed al-Tuwaijri said in a statement.

“This ensures that residents and expatriates, including those who have lived in the kingdom for decades, are an active part of Saudi Arabia’s economy,” Tuwaijri said. “This will strengthen the state’s revenue and robustly support the Saudi economy.”

Under the proposed law, applicants can seek an indefinite stay or a 1-year renewable residency, the official Saudi Press Agency said.

The "Privileged Iqama" system, similar to Green Card systems in other countries, is expected to draw more investors and entrepreneurs to the kingdom, driving private sector growth and expanding employment opportunities for the local population.

However, it fuelled controversy in a country that hosts a large expatriate population but has been unable to provide jobs for many of its citizens. The unemployment rate in Saudi Arabia is estimated at 12.6%.

“Despite the benefits of the special residency system some are fearful of it and that it could be exploited in a way that affects the stability of Saudi businesses,” Saudi economist Ahmed al-Shehri wrote on Twitter.

Others voiced concerns that the plan could go against the country’s popular Saudisation strategy, which looks to increase the number of Saudis working in the private sector and reduce reliance on foreign workers. Slogans such as “Saudi is for Saudis” are common on social media.

Granting residency permits to expatriates would be a landmark move in a region where foreign workers are often subjected to restrictive residency policies. Some labourers are required to secure a local sponsor to enter the country and must receive permission to leave.

The United Arab Emirates has also moved to reform its residency policy, approving a plan that would allow wealthy foreigners to apply for a 10-year stay.

The biggest beneficiaries of the Saudi move would be thousands of wealthy Arab residents who have lived in the kingdom for decades “without being able to as much as own the homes they live in,” said Mazen al-Sudairi, head of research at Al Rajhi Capital.

Tuwaijri pointed out that the plan would also benefit “multinational corporations, both those operating in the kingdom or those that want to enter the market.”

While Saudi Arabia wants wealthy expatriates who add to any unique labour value to stay, the government is conscious of popular disillusionment with the labour market. To increase Saudi nationals’ participation in the private market, the government imposed fees on foreign workers and their families, which, along with sluggish growth, has prompted hundreds of thousands to leave.

Lina Almaeena, a member of the consultative Shura Council, the appointed body that approved the programme on a 76-55 vote -- said the new residency system would help the kingdom. “(It) is for doctors, engineers, innovators, investors and residents who contribute to the development of Saudi Arabia and lead to a prosperous future,” she said.

Nasser Saidi, president of Nasser Saidi & Associates and former chief economist at the Dubai International Financial Centre, said the system is a “step in the right direction.”

There are more than 12 million expats in Saudi Arabia -- more than one-third of the total population -- official statistics indicate. They are currently required to be sponsored by a Saudi employer and be issued an exit/re-entry visa whenever they want to leave the country.